Saudi Arabia PMI December 2016

Saudi Arabia: Non-oil business activity hits four-month high in December

January 4, 2017

The Purchasing Managers’ Index (PMI) sponsored by Emirates NBD and produced by IHS Markit rose from November’s 55.0 to 55.5 in December, the highest value since August 2016. As a result, the index remains comfortably above the 50-threshold that indicates expansion in business activity in the non-oil producing private sector.

December’s improvement reflected that output expanded robustly. Moreover, business sentiment benefited from rising purchasing activity and higher inventories as firms are anticipating stronger demand going forward. Although new orders expanded at a robust rate, their pace of growth softened in the same month. Moreover, given still-weak economic activity in the country, staffing levels remained subdued. According to Emirates NBD, “improving demand was a key driver for output and new order growth in Saudi Arabia in December, which is very encouraging as we look forward to 2017. […] Overall, the pace of non-oil private sector growth this year, as indicated by the PMI survey, was markedly lower than 2015.”

FocusEconomics Consensus Forecast panelists see fixed investment rising 2.6% in 2017, which is unchanged from last month’s estimate. For 2018, the panel expects fixed investment to increase 4.9%.